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Understanding Your Legal Rights When Facing Foreclosure

The prospect of facing foreclosure or actually being in foreclosure, can be extremely stressful. In fact, despite the improved economy, many homeowners are still struggling with their mortgage payments. The Law Office of David Pankin has been representing homeowners that are behind on their mortgage or in foreclosure for over 20 years. During this time, we have helped hundreds of New York homeowners successfully keep their homes. What is unique about our firm, is that we offer a wide array of legal options for homeowners facing foreclosure. These options include: fighting the foreclosure in court (foreclosure defense), chapter 13 bankruptcy (getting a court ordered payment plan for past due mortgage payments), chapter 7 bankruptcy with loss mitigation, chapter 13 bankruptcy with loss mitigation, and negotiating loan modifications through a court ordered settlement conference or outside of court. After a thorough meeting with our clients, we analyze and develop a strategy that would be best fit our clients’ specific situation. If you are behind on your mortgage or facing foreclosure, please contact our office for a free consultation. We would be happy to assist you.

What is Foreclosure?

When financial hardships occur even the most financially cautious individuals may fall behind on their mortgage payments. Foreclosure is the legal process that allows a lender to seek approval from Court to sell a home secured by a mortgage after a borrower falls behind on their mortgage obligations. Typically, if a borrower falls behind on the mortgage payments more than three months, the lender will no longer accept regular mortgage payments and will demand the borrower pay all of the missed payments in one lump sum in order to reinstate the loan. If the borrower is unable to do this, the lender may start a foreclosure lawsuit against the borrower. The process begins when a person receives a court summons and complaint that outlines the lender’s reason for seeking legal action. From this moment on, time is of the essence; if a homeowner delays in responding to the summons, he or she may forfeit valuable legal rights.

Our Foreclosure Lawyers Review All of Your Options

When a homeowner comes to our office looking for a foreclosure lawyer, they are often behind on their mortgage payments or already in foreclosure. We make sure to evaluate their all their options. There are two main options are available to stop a foreclosure: (1) opposing the lender’s foreclosure proceeding in state court or (2) filing for bankruptcy in federal court which, in most cases, will stop any foreclosure proceeding against the homeowner, including sale dates.

Foreclosure Defense In New York State Court

Our office will review a homeowner’s defenses and settlement options and give our best advice as to how to vigorously defend against a foreclosure lawsuit. Usually, the first step in defending against a foreclosure lawsuit is answering the complaint by filing papers with the Court that challenge the lender’s filing and institute defenses on behalf of the borrower. Typically, the next step is attempting to settle the case, typically through a loan modification in Foreclosure Settlement Part which is overseen by a referee or judicial hearing officer. However, some homeowners come to us after their time to answer or appear in the Foreclosure Settlement Part has lapsed. In these cases, we evaluate the borrower’s ability to bring a motion to vacate their default and oppose any motion that the lender may have brought against them. Depending on the fact of the case, challenging a foreclosure case in New York State Court might not be realistic or may no longer be feasible if a judgement has already been awarded to the lender or the action is nearing conclusion. The Debtor’s best option to attempt to keep a home or at least delay a foreclosure action or sale date might be through bankruptcy.

Retaining A Home With Chapter 13 Bankruptcy

One of the main advantages to filing Chapter 13 bankruptcy is that allows the debtor to repay their past due mortgage payments in an interest free five-year payment plan. Once the payment plan is approved by the Bankruptcy Court, the lender has no choice but to accept the past due payments. During the bankruptcy case, the debtor will make plan payments for the past due mortgage arrears to a Bankruptcy Trustee and simultaneously start making their current mortgage payments going forward as if the homeowner was never in foreclosure. If a debtor is unable to afford a Chapter 13 payment plan due to a high past due mortgage balance, they may be able to apply for a loan modification in the Bankruptcy Court’s loss mitigation program.

Bankruptcy Provides Debtors With An Automatic Stay

A significant benefit of filing for bankruptcy, whether the debtor chooses Chapter 7 or Chapter 13, is that it provides an automatic stay. This means that once a bankruptcy case is filed it typically puts a stay on all lawsuits and collection matters, including foreclosure auctions. This stay would require a mortgage lender to cancel any scheduled foreclosure sale date. Once the automatic stay is in place, the lender will be unable to proceed with a foreclosure lawsuit or sale without the permission of the Bankruptcy Court.

Retaining A Prior Loan Modification With Chapter 13 Bankruptcy

If a homeowner has a prior modification with a preferential interest rate, a Chapter 13 payment filing allows the homeowner to get current on their modification instead of applying for a new modification. Since the Home Affordable Modification Program (HAMP) is now closed, a new modification may be a worse deal over the life of the loan than simply paying back the past due payments in a Chapter 13 plan.

Removing A Second Mortgage in Chapter 13 Bankruptcy

Chapter 13 bankruptcy also gives homeowners with no equity in their property (where the first mortgage balance exceeds the current fair market value of the home) an additional opportunity. If the debtor’s home has no equity, the debtor may have the ability to remove second mortgage in Chapter 13 bankruptcy proceeding (this is called a lien strip). Removing a second mortgage is typically done through a motion in the bankruptcy court. If the homeowner’s motion is successful, the court will order that the second mortgage be removed from the property. Upon removing the second mortgage, the debt will be treated like any other unsecured debt in the Chapter 13 plan.

Retaining A Home With Chapter 7 Bankruptcy

Sometimes a homeowner is burdened by debt (credit cards, personal loans, medical bills, etc.) and they need a fresh start. In a Chapter 7 bankruptcy, a debtor is able to eliminate their dischargeable debts and free up money in their budget that can be put toward making their mortgage payment. If a debtor qualifies for Chapter 7, a debtor can retain the home in which they live if the amount of equity (which is determined by subtracting any mortgage loan balance(s) from the property’s fair market value) falls within the available bankruptcy homestead exemption. As of April 2019, in the New York counties of the Bronx, Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, Suffolk, and Westchester, the single debtor can protect up to $170,825 in equity in a property (this goes up to $341,650 if filing jointly with their spouse who jointly owns the property). Chapter 7 debtors who are behind on their mortgage payments or in foreclosure may be able to enter the Bankruptcy Court’s loss mitigation program and apply for loan modification. The elimination of their unsecured debt obligations in Chapter 7 should make them a better candidate for a loan modification. This allows the debtor to get a fresh start and settle the foreclosure lawsuit at the same time.

Contact The Law Offices Of David I. Pankin, P.C. Today

At the Law Offices of David I. Pankin, P.C., our foreclosure lawyers have over 20 years of experience assisting homeowners facing foreclosure. Upon contacting us, an attorney will review your case and evaluate your foreclosure defense, bankruptcy and mortgage modification options. If you are struggling beneath the threat of foreclosure or just finding it hard to make your mortgage payments on time, please do not hesitate to contact our office by phone at 888-529-9600 or by using our easy online contact form to arrange for a free consultation. Remember, “bankruptcy is not the end, it’s a new beginning.”

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